Obama Continues Down Road to Greater Job Loss, Less Freedom

President Barack Obama reiterated his “jobs will be our number one focus” State of the Union talking point in New Hampshire on Tuesday, but all indications are that he is continuing down the path that led America to less economic freedom – and fewer jobs – in 2009.

Heritage’s Brian Riedl conducted a quick analysis of President Obama’s Fiscal Year 2010 budget and found that the President’s policies would hike taxes by more than $2 trillion over the next decade (counting health care reform and cap-and-trade), raise taxes for 3.2 million small businesses and upper-income taxpayers by an average of $300,000 over the next decade, leave permanent deficits that top $1 trillion in as late as 2020, and double the publicly held national debt to over $18 trillion.

Increasing taxes and a growing federal government don’t spell good news for America’s economic freedom or prospects of job growth, but even more trouble abounds. Matthew J. Slaughter, associate dean and professor at the Tuck School of Business at Dartmouth, wrote in Wednesday’s Wall Street Journal that there is even more bad news for U.S.-based multinational firms buried in the President’s budget:

Deep in the president’s budget released Monday-in Table S-8 on page 161-appear a set of proposals headed “Reform U.S. International Tax System.” If these proposals are enacted, U.S.-based multinational firms will face $122.2 billion in tax increases over the next decade.

The fundamental assumption behind these proposals is that U.S. multinationals expand abroad only to “export” jobs out of the country. Thus, taxing their foreign operations more would boost tax revenues here and create desperately needed U.S. jobs.

This is simply wrong. These tax increases would not create American jobs, they would destroy them.

The 2010 Index of Economic Freedom reveals that the markets suffer, the environment for growth and job creation is threatened and economies are less free when tax burdens go up and Washington undertakes bailouts, massive stimulus spending and other dangerous interventionist decisions. This certainly happened in the United States in 2009. Last year, 3.4 million jobs were lost, with losses occurring in every single month of the year. And with the President pushing for even more taxing, spending and federal government interventionism, America is heading down the path to even less economic freedom and less prosperity. That, of course, means fewer jobs.

There is another potential employment loss risk inherent in the international tax increase. Companies facing higher federal taxes, coupled with increased state and local taxes, would be encouraged to simply change countries. They could base in a more business and tax freindly country, with good comunication and well educated & trained workforce. Their USA tax liability would be limited to the earnings on their US subsidiary but corporate earnings and cash flow would be significantly enhanced by lower taxes.

Jobs lost through re-location would be pretty much permanent, as would the tax revenue lost. It is more difficult but not a lot more, to relocate internationally rather than between states as is mainly happening now.

Examples of this abound outside of the USA. It is currently happening to the UK with its new 50% tax rate on "fat cats" within the finance industry. Switzerland has special programs set up to welcome transplants from the UK. There is no reason why the same will not happen to the USA if it continues down this suicidal path.

Corporate taxes are inherently dishonest, because corporations do not pay taxes… people do. If a corporation, say McDonald's, writes a check to the IRS, the money comes primarily from it's customers (people). If McDonald's did not have to write that check, the money could be used generally in four ways. Prices could be reduced, benefiting it's customers (people). McDonald's could increase wages for it's employees (people), resulting in taxable personal income. Third, the money could be plowed back into the business by investing in plant or equipment, which would provide employment for third parties (again, people), also resulting in taxable income. Or, finally, McDonald's could distribute the money back to the owners/shareholders (who are people too), who would earn a reward for risking their money in the first place. Oh, yeah, the owners/shareholders would be on the hook for taxes on that income too.

Bashing corporations makes for good copy in the media. Yet few people truly understand the enormous contribution that the corporate structure has made to our prosperity, allowing groups of people to get things done that few, other than the super rich, could ever tackle on their own. Drive out corporations, through taxation and endless regulation, and you drive out prosperity. And most Americans will wonder what happened.

Anybody who thinks you can tax a country into prosperity is clueless to the reality of the situation. Paul, in Port Washington, WI, hit the nail on the head.

Hey, Randy, did it ever occur to you that the "rich elite" may have just worked their behinds off to become wealthy? Did it ever occur to you they actually earned their position in life? Did it ever occur to you that the vast majority of taxpayers do not cheat on their taxes? Those who do should be caught and punished (that would about wipe out Obumble's administration, wouldn't it?) Our tax structure doesn't discriminate between those who worked for their money and those who lucked into it or cheated their way to the top…..that's not the way the code is written. Quit being angry at people with money, who already shoulder 99% of the tax burden, and just work a little harder and save a little more. If you're lucky you can be taxed like them.

[…] But, you know what? We can’t really blame the MSM for focusing on healthcare “reform” over all other issues – even MassaGate – especially when you consider that shoving healthcare “reform” down the throats of the American people has been Priority One in this administration from day one, even more important than (non-govt) job creation and, you guessed it, Afghanistan. Fortunately, the Prez. eventually ended up putting Afghanistan on the 1st-year priority list (somewhere in the top 10) but (non-govt) job creation? Not so much. […]

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